Australian PM pledges A$1.2 bil for critical minerals reserve in election push

Australian Prime Minister Anthony Albanese promised A$1.2 billion ($765.12 million) for the strategic critical minerals reserve he proposed in response to US reciprocal tariffs.

While campaigning ahead of the May 3 federal election, Albanese said April 24 that if his Labor Party retains control of Australia's government, it will create a reserve built on national offtake agreements and selective stockpiling, although the minerals that would be included were not specified.

The government will establish Australian stockpiles of "certain key critical minerals produced under offtake agreements as required." It will acquire agreed volumes of critical minerals from commercial projects through voluntary contractual arrangements or establish an option to purchase at a given price, holding security over the assets as part of the reserve. The government will also encourage local businesses to buy products from Australian projects.

Australian resources minister Madeleine King said in October 2024 that the country's rare earths are "integral" to the AUKUS security deal with the US and UK. On April 15, US President Donald Trump initiated a Section 232 investigation into imports of processed critical minerals and their derivative products to reduce dependence on China.

Australia is the world's largest producer of lithium, bauxite and iron ore, and a top-five producer of cobalt, manganese ore, rare earths, rutile, tantalum and zircon, according to the government.

Australia's government and industry see their critical minerals abundance as important leverage in negotiating a better trade deal with the US, which subjected Australia to 25% tariffs on steel and aluminum and a baseline 10% tariff on many other items.

"To leverage our natural resources is in our national interest ... It will mean we can deal with trade and market disruptions from a position of strength because Australia will be able to call on an internationally significant quantity of resources in global demand. This will be a national asset, and our government will use it to advance Australia's national interest," Albanese said.

"A task force will be established to consult and finalize the scope and design of the strategic reserve in government, which is expected to be operational in the second half of 2026."

Boosting investment

Both the industry and the government believe creating a critical minerals stockpile will provide confidence for Australia's critical minerals sector to invest in a tough equity market while developing secure supply chains with key international partners.

"Stockpiles could also be used to provide feedstock certainty for processing facilities and will allow Australia to negotiate from a stronger position in regard to our critical minerals and coordinate trade in the national interest," said Shannon O'Rourke, inaugural CEO of Powering Australia Ltd., which is the follow-on entity to Australia's Future Battery Industries CRC that will wrap up its program of works in June when funding concludes.

O'Rourke noted in an email to Platts, part of S&P Global Commodity Insights, that "many other nations already have critical minerals stockpiles." These include Japan, through the Japan Organization for Metals and Energy Security (JOGMEC); China, via its National Food and Strategic Reserves Administration; the EU, under the Critical Raw Materials Act; and the US, through its National Defense Stockpile.

Albanese's strategic reserve commitment complements a range of other government measures, including the Critical Minerals Production Tax Credit and the Critical Minerals Facility, which "provide a meaningful incentive for local processing," O'Rourke said.

The funding commitment, which includes an A$1 billion increase to the existing Critical Minerals Facility, needs to be followed by in-depth industry consultation to help identify priority minerals and strategic partners, how and when it will be implemented, and what the initial focus will be, Warren Pearce, the CEO of the Association of Mining and Exploration Companies, said in an April 24 statement.

"If done right, this could help Australian critical minerals projects secure the financing they need to build new mines," Pearce said.

"There are a range of critical minerals and critical mineral byproducts that should be considered. This is key to obtaining international investment confidence from our global partners and to securing supply chains of the future."